Labour Taxes and Unemployment Evidence from a Panel Unobserved Component Model
This paper estimates the impact of labour taxes on unemployment using a panel of yearly observations (1970-2001) for 16 OECD countries. Possible heterogeneity of the unemployment incidence of taxes is taken into account by grouping countries according to their wage-setting institutions. Panel data unit root and cointegration tests show that unemployment and labour tax rates are non-stationary but not cointegrated. As this finding may be induced by missing non-stationary variables we set up a panel unobserved component model. Labour taxes are found to have a positive impact on unemployment only in countries characterised by strong but decentralised unions.
Year of publication: |
2007-08
|
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Authors: | BERGER, T. ; EVERAERT, G. |
Institutions: | Faculteit Economie en Bedrijfskunde, Universiteit Gent |
Saved in:
freely available
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